How could Snowden and Navy Yard killer get top security clearances?

Saturday

Sep 28, 2013 at 6:00 AMSep 28, 2013 at 8:06 PM

By Trip Gabriel, THE NEW YORK TIMES

The calls and emails from top executives came toward the end of each month, former managers at USIS recalled. The company needed to swiftly complete investigating security clearances for the government in order to reach its monthly revenue goal, the managers said they were told. Finally, there was an order: "Flush" everything you've got.

The directive to give quick final approval of background investigations without reviewing them for quality — known as flushing — was sent, the managers said, to a branch office of USIS, a company whose 700,000 yearly security checks for the government have included those of Edward J. Snowden, the National Security Agency leaker, and Aaron Alexis, who the police say shot and killed 12 people at the Washington Navy Yard last week.

In interviews this week, former and current USIS employees detailed how the company had an incentive to rush work because it is paid only after a file is marked "FF," for fieldwork finished, and sent to the government. In the waning days of a month, investigations were closed to meet financial quotas, without a required review by the quality control department, two former senior managers said.

The details of how its contract was structured provide new insight into the workings of USIS, a company that is now the focus of two federal inquiries, including a grand jury investigation in Washington, according to congressional testimony and people with knowledge of the proceedings.

The federal Office of Personnel Management confirmed that it pays USIS on a piecework basis. "The vendor is paid upon the delivery of a completed case," the agency said in a statement. People familiar with the contract said it was intended to give the company an incentive to be efficient.

USIS, based in Falls Church, Va., and the largest outside investigator for security clearances for the federal government, declined to comment.

A person familiar with the USIS corporate structure said that two top executives, a division president and the chief financial officer, had been fired after being found responsible for ordering the flushing.

Since the terrorist attacks of 2001, the need for Americans with security clearances to work for the Pentagon and military contractors has soared, with a long backlog building up in the early years of the Bush administration. Investigations for a top-secret clearance took 400 days. Companies used the Internet to identify workers with clearances at rival firms and paid them bonuses to jump ship. To speed up investigations, the federal personnel office hired private companies like USIS to do the majority of the work, which significantly eased the backlog.

Since questions about the security clearances for Snowden and Alexis came to light, however, some in Congress are asking whether speeding up cases led to unintended consequences: investigators prone to cut corners and, in extreme cases, to falsify reports.

"My confidence in the system has been shaken by those two cases," said Sen. Susan Collins, R-Maine, who introduced a bill that first mandated deadlines for investigations in 2004. "There was a lot of pressure to get rid of the backlog. What OPM did to cut the backlog is it contracted about half of the background checks it's responsible for doing. It seems to me that there are quality questions about the work done by the contractors."

The original federal investigation of USIS began, according to people with knowledge of the proceedings, in late 2011 when a company whistle-blower approached the inspector general in the personnel office, which oversees more than 2 million background investigations a year for the Defense Department and many other agencies. Its contract with USIS, which has 6,600 employees, is worth $2.45 billion over five years.

At a congressional hearing in June, an assistant inspector general in the personnel office, Michelle Schmitz, called the USIS investigation a "complicated contract fraud case" and declined to provide further details.

When USIS learned of the investigation, it fired a dozen managers in its quality review office in Grove City, Pa., over two days in September 2012. Some current and former employees say they were made scapegoats for a problem originating at the highest levels of the company.

This summer a federal grand jury in Washington issued subpoenas seeking email and other records of senior USIS executives who might have applied pressure to flush cases, according to people with knowledge of the investigation. At issue is whether the company committed criminal fraud if it did not review cases as required by its government contract. The grand jury investigation was first reported by The Wall Street Journal.

The account of the pressure on USIS to clear cases was provided by two former senior employees and one current employee, all of whom spoke on condition of anonymity. The current employee feared being fired; the two former employees, both of whom were terminated — one for causes unrelated to the federal investigation — received severance packages and signed nondisclosure agreements with USIS.

On Monday, the Navy released the 2007 background report done by USIS on Alexis, which showed that investigators learned that he had been arrested three years earlier in Seattle, but the report did not include the crucial information that he had shot the tires of a construction worker's car in what he told the police was an anger-fueled blackout. Alexis was given a secret security clearance in 2008, which was still valid Sept. 16 when he stalked and killed a dozen victims at the navy yard with a sawed-off shotgun before police killed him.

In a statement, the personnel office said that Alexis' background investigators had found a record of his 2004 arrest in FBI files, but that the Seattle Police Department would not release the detailed report. Investigators relied on an interview with Alexis, who claimed that he had only deflated the construction worker's tires. Mert Miller, an associate director for investigations in the personnel office, said in a statement, "The agency believed that the file was complete and in compliance with all investigative standards."

USIS also conducted the most recent security investigation of Snowden, in 2011. Patrick McFarland, the inspector general of the personnel office, told a Senate hearing in June that "there may be some problems" with the Snowden investigation, but he declined to give details.

Once an arm of the federal government, USIS was spun off into the private sector in the 1990s as U.S. Investigations Services. Former employees said it became aggressively focused on meeting revenue goals after it was bought in 2007 by Providence Equity Partners for $1.5 billion.

"It all became extremely numbers-intensive," said a former executive with top-level management responsibility. "There would be a crisis situation when you were off by 2 percent" from a revenue quota.

A spokesman for Providence declined to comment.

Between 2005 and 2011, Congress held 14 hearings to bring attention to the problem of the security clearance backlog. A White House official in the Bush administration, Clay Johnson, was named chairman of a task force to tame the backlog. "We paid a lot of attention to it," he said. "There was no excuse."

Part of the solution was as simple as switching to online questionnaires. Another was enabling the personnel office to hire more field investigators rapidly, which it did by outsourcing 75 percent of the work to the private sector.

The time to close a file shrank from an average of 145 days in 2005 to 36 this year, according to the Federal Investigative Service, a bureaucratic triumph celebrated by Republicans and Democrats.

At a congressional hearing in June looking into Snowden, senators pressed leaders of the personnel office on whether pressure to speed up investigations was "leading to lower quality," as Sen. Rob Portman, R-Ohio, suggested. In 2009 the Government Accountability Office found that 87 percent of investigative reports were incomplete.

Miller of the personnel office said files were incomplete because employers may refuse to cooperate or character witnesses may be deployed overseas.

The inspector general disclosed at that hearing that 18 background investigators had been convicted of falsifying reports since 2006, adding, "I believe there may be considerably more." They included a record researcher who fabricated 1,600 credit checks, and the case of Ramon Davila, a former USIS investigator who pleaded guilty in August to filing reports of interviews he did not conduct.

In the lingo of field investigators, falsifying a report is "ghostwriting." Carolyn Martin, president of the American Federal Contract Investigators Association, a professional group, said the government blamed individual rogue investigators for fraud. But in her view the fault lies with the government's requirements and incentives for companies like USIS.

"If you've got a contract that is enforcing the flushing that has been occurring," she said, "then you're just asking for trouble."

A former senior USIS manager said the company had "jumped the shark" when it introduced a computer system to oversee workflow. It assigned investigators a fresh case as soon as they filed an existing one, monitored how much time was spent on cases and imposed deadlines as short as two days. All the performance statistics were tied back to the company's revenue targets.

"That to me is the No. 1 reason why investigators felt the pressure," said the former senior manager. "It was a system that didn't have enough human common sense built into it."